Technical Analysis: EUR/USD, GBP/USD, USD/JPY and USD/CAD
ICM Brokers | Nov 07, 2011 05:23AM ET
EUR/USD
Greek Prime Minister George Papandreou agreed to step down to allow the creation of a national unity government that will secure international financing and avert a collapse of the country’s economy. Papandreou met with Antonis Samaras, leader of the main opposition party, and agreed to form a government intended to lead Greece “to elections immediately after the implementation of European Council decisions on October 26,” according to an e-mailed statement yesterday from the office of President Karolos Papoulias in Athens. Papandreou already stated he won’t lead the new government, the statement said. “A lot is already being asked of the yet-to-be-formed coalition and markets could be wary of any splits that appear, especially over the tougher decisions yet to be taken,” Thomas Costerg, an economist at Standard Chartered Bank, said in comments made before yesterday’s announcement. “Greece is still not out of the woods.”Both sides will meet again today to decide who will be the head of the new government with a separate meeting to discuss the time frame and the government’s mandate, the statement said.Papoulias will also host talks with all political party leaders today as well. Trying to preserve international aid before the nation runs out of money next month, Papandreou raced over the past 48 hours to clinch an agreement with the main opposition party before markets open today, healing divisions to secure an aid agreement. Samaras, 60, who previously demanded elections and balked at joining forces with Papandreou’s socialist Pasok party, said he was “determined to help” reach an agreement as long as the premier stepped down first.
GBP/USD
BP Plc’s $7.1 billion sale of its stake in Argentine crude producer Pan American Energy LLC to China’s Cnooc Ltd . Collapsed, 10 days after Argentina’s president ordered oil companies to repatriate export revenue. BP will repay a $3.5 billion deposit it had received for the sale by Nov. 14, the company said after Bridas Corp. , owned by Cnooc and Argentina’s billionaire Bulgheroni family, announced Nov. 5 that the deal was canceled for “legal reasons.” Bridas owns 40 percent in Pan American and the purchase of the remaining 60 percent, announced last year, was pending Argentine antitrust approval.“Bridas has informed BP of its decision to cancel the sale,” Buenos Aires-based Bridas said in an e-mailed statement. “The decision is motivated by legal issues, the manner in which BP behaved during the transaction and its signing.”The decision comes less than two weeks after Argentina President Cristina Fernandez de Kirchner , re-elected on Oct. 23, ordered energy and mining companies to repatriate future export revenue in a bid to slow accelerating capital flight from South America’s second-biggest economy. The move by Fernandez, who nationalized the $24 billion pension fund industry and has moved to block foreigners from purchasing rural land since taking office in 2007, was a sign that she will likely “increase intervention and pressures on the private sector” heading into her second term, said Daniel Kerner, a Latin America analyst at the Eurasia Group.
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USD/JPY
Tokyo Stock Exchange Group Inc. and Osaka Securities Exchange Co. have entered final takeover talks, forging a deal that would unite Japan’s largest bourse operators next year, Nikkei reported, without citing anyone. Tokyo Stock Exchange, which runs the main venue in the world’s third-largest equity market, would offer to buy between 50 percent and 66 percent of Osaka, according to the newspaper. Nikkei said today that Tokyo Stock Exchange would be valued 1.5 to 2 times more than Osaka, which had a market capitalization of 98.6 billion yen ($1.26 billion) at the end of last week. Tokyo Stock Exchange has made no decision like that reported today, the bourse said in a Japanese-language statement posted on its website. Osaka’s bourse has made no decision on a merger, it said in a statement. Osaka Securities Exchange, Japan’s second largest, was poised to rise 16 percent to 423,000 yen from the closing price of 365,000 yen.Atsushi Saito, TSE’s president, said in a March 10 interview that he planned discussions with Osaka, a day before Japan’s record earthquake. While the Tokyo bourse isn’t publicly traded, the Nikkei report implies it will be valued more than Chicago Board Options Exchange owner CBOE Holdings Inc. and less than London Stock Exchange Group Plc, Bloomberg data show.
USD/CAD
Canada’s dollar had its first weekly drop since September against its U.S. counterpart as concern European leaders are struggling to contain Greek turmoil crimped demand for riskier assets such as stocks and commodities. The currency fell versus most of its 16 major counterparts tracked by Bloomberg in the first days of November as a report showed Canada’s jobless rate unexpectedly climbed last month. Yields on 10-year government bonds fell the most since the depths of the financial crisis almost three years ago. Canada will sell two-year bonds this week. “The commodity currencies have come under pressure on the lack of market confidence in this Greek situation,” said Blake Jespersen, director of foreign exchange at Bank of Montreal in Toronto, in a telephone interview. “Lots of investors took money off the table as soon as the political rumblings out of Greece erupted this week. The money hasn’t come back. The jobs number added to the downward momentum in the Canadian dollar.”Canada’s currency, also known as the loonie for the image of the aquatic bird on the C$1 coin, depreciated 2.7 percent this week to C$1.0188 per U.S. dollar after falling yesterday to C$1.0229, the weakest level since Oct. 20. One Canadian dollar buys 98.16 cents. Volatility in the Canadian dollar versus the greenback rose after reaching the lowest level in more than a month last week. One-month implied volatility on the currency pair ended at 12.81 percent, compared with 10.98 the week before. It climbed as high as 15.99 percent Oct. 4. The average over the past five years is 11.69 percent.
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